Tri Terminal Corp. v. CITC Industries, Inc.

• Decision Date: 30 July 1979
• Docket Number: TRI-TERMINAL
• Citation: 419 N.Y.S.2d 817,100 Misc.2d 477
• Parties: CORP., Plaintiff, v. CITC INDUSTRIES, INC., Defendant.
• Court: New York Supreme Court

Page 817

419 N.Y.S.2d 817

100 Misc.2d 477

TRI-TERMINAL CORP., Plaintiff, v. CITC INDUSTRIES, INC., Defendant.

Supreme Court, Special Term, New York County, Part I.

July 30, 1979.

Ashley & Lewittes by Paul M. Lewittes, New York City, for plaintiff.

Vincenti & Schickler by Michael F. Youdovin, New York City, for defendant.

ANTHONY MERCORELLA, Justice:

Plaintiff, Tri-Terminal Corp., as landlord and owner of certain property, originally commenced this action against defendant-tenant, CITC Industries, Inc., seeking to recover rent, unpaid property tax penalties, and expenses for repairs and refuse removal.

Issue was joined in September, 1976 by service of an Answer in which defendant asserted an affirmative defense that plaintiff lacked legal capacity to maintain the action since it was not authorized to do business in this State. Additionally, defendant put forth a counterclaim alleging that it paid for the real estate taxes and that plaintiff misappropriated the same causing defendant to be damaged. Plaintiff's reply consisted solely of general denials to the counterclaim.

In October, 1978, defendant moved to dismiss the complaint pursuant to CPLR § 3211(a)(3) on the grounds of plaintiff's legal incapacity under the B.C.L. § 1312. This motion was granted by the court. In so doing, the Hon. Hilda G. Schwartz dismissed the complaint and severed the defendant's counterclaim allowing it to "remain as a cause of action against the plaintiff." A note of issue on the counterclaim was subsequently served.

The present motion is made by Tri-Terminal to vacate the note of issue to allow it to conduct examinations before trial and also, to amend what, in effect, is its reply to CITC's counterclaim, so as to include Tri-Terminal's own counterclaims which are the very same causes of action that comprised the original complaint. CITC cross-moves seeking costs plus attorneys' fees on the ground that Tri-Terminal's motion is frivolous due to the prior dismissal order.

CPLR § 3011 states, in pertinent part, that "An answer may include a counterclaim against a plaintiff . . . ." and a plaintiff "shall reply to a counterclaim." Prior to the enactment of this section, the law was clear that a counterclaim could not be interposed in a reply and there is nothing in the language of the CPLR that would mandate a departure from this rule. See Chambland v. Brewer, 51 Misc.2d 231, 272 N.Y.S.2d 903 (1966); Swertz v. Swertz, 28 Misc.2d 904, 211 N.Y.S.2d 252; Habiby v. Habiby, 23 A.D.2d 558, 256 N.Y.S.2d 634 (1st Dep't., 1965); I N.Y.Adv.Comm.Rep. 71 (1957). As stated by the court in Garfinkle v. Kaplan, 77 Misc.2d 1097, 355 N.Y.S.2d 974, 975 (1974), "While a 'Rose is a rose is a rose' (Sacred Emily by Gertrude Stein, 1917), a counterclaim is not a rose and tautologically and procedurally speaking, there cannot be a counterclaim to a counterclaim." In this court's opinion, the underlying basis of these decisions was that if a plaintiff wanted to assert a new cause of action against a counterclaiming defendant, the proper procedure would be to amend his complaint pursuant to CPLR § 3025(a) or (b).

In the case at bar, however, this avenue of procedure is no longer available to the plaintiff since its complaint was dismissed by court order. As such, it obviously cannot be amended. Moreover, plaintiff no longer has a cause of action against defendant. But the defendant's counterclaim remains as a cause of action against the plaintiff. Consequently, this court is faced with a somewhat unique procedural situation.

A counterclaim is in essence a complaint by a defendant against the plaintiff and alleges a viable cause of action upon which the defendant seeks judgment. It is not a responsive pleading merely because it is contained in a responsive paper. the pleader of a counterclaim is a plaintiff in his own right. See Fettretch v. McKay, 47 N.Y. 426, Edelman v. Edelman, 88 Misc.2d 156, 386 N.Y.S.2d 331 (1976).

In Chin v. Chin, 44 A.D.2d 812, 355 N.Y.S.2d 422 (1973), the court said that the counterclaim and reply became pleadings which were, in effect, independent and separate of the underlying action. Based on the foregoing, it is the opinion of this court that because Tri-Terminal's complaint was dismissed, it can no longer be considered a plaintiff but remains solely a defendant on CITC's counterclaim. Consequently, CITC's answer is now deemed to be a complaint and Tri-Terminal's reply an answer. Furthermore, Tri-Terminal shall be allowed to amend its pleading to include its own counterclaims.

CITC's contention that Tri-Terminal is barred from alleging the same causes of action as counterclaims under the doctrine of res judicata is unfounded. That doctrine requires a final judgment On the merits in one action and an attempted relitigation in a second action. See Siegel, NY Practice §§ 445, 446. Here, the order of Justice Schwartz was predicated upon a ground which disposed of the case without reaching the merits. A dismissal based on plaintiff's lack of capacity to sue is dispositive only of that particular objection and does not preclude a new action which overcomes that objection. Siegel, NY Practice § 445.

However inartfully alluded to by CITC, the doctrine of the law of the case is actually at issue. This doctrine applies to various stages of the same action and attempts to avoid the retrial of issues previously determined. See McGrath v. Gold, 36 N.Y.2d 406, 369...